Category Archives: profiteering

Grab the Money and Go: Nevada School Funding Case Scheduled

Turkey

It’s a turkey, no matter how one looks at it – the proposal for parents to be able to grab public money for “private” education in the state of Nevada and run off to do heaven only knows what with it.  And, now the case comes to the courts.  [LVRJ]

“The law passed by the Republican-controlled 2015 Legislature and signed by Gov. Brian Sandoval allows parents to set up education savings accounts to receive a portion of state per-pupil funding and use the money, about $5,100 annually, to send their children to private school or pay for other educational options. The program, administered by the state treasurer’s office, has received more than 6,000 applications.

A group of parents sued in Carson City, arguing it will illegally divert money from public schools. A Carson City judge in January agreed and issued an injunction.

The ACLU challenged the law on separate grounds, claiming it violates a constitutional prohibition against using money for sectarian purposes. A Clark County judge last month rejected those arguments and upheld the law.” [LVRJ]

I’m not at all sure why the ACLU case didn’t have a better outcome, because the Nevada Constitution is very clear about prohibiting public funds for sectarian use.   Additionally, I’m a bit fogged about why the ultra-conservatives in Nevada would want to allow funds for potentially radical religious instruction of any stripe.  There’s a question here – would these same people be so supportive if the private school receiving the money were, say, a madrasah?

And, it’s notable that we aren’t talking about peanuts here.  If 6,000 families each grab $5,100 every year from taxpayer funds for private schooling, then we’re speaking of some $30,600,000, or $61,200,000 for the biennium.

If  the idea is to bankrupt public education and then privatize the remnants, this is a perfect formula.  Complain that the public schools are not performing to some artificially established standard, then promote the creation of private schools, followed hard by the transfer of funds away from public education into those private “reformers,” and perpetuate the cycle of under-funded public  schools trying to compete with corporation sponsored private ones.  There’s no way for the public schools to win, and that’s precisely what the privatizers have in mind.

Stay tuned, the Nevada Supreme Court will hear the case on July 29, 2016.

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Filed under education, nevada education, Nevada judiciary, Nevada legislature, Nevada politics, privatization, profiteering

Amodei, Heck, Hardy, Sell Out Seniors

Amodei 3 There are three members of the House of Representatives from Nevada who, as of April 28, 2016 at 3:23 pm roll call vote #176, don’t get to talk about protecting retired persons, and their interests.  One of these members is Mark Amodei (R-NV2) who decided to vote “yes” on a House temper tantrum about Department of Labor rules on fiduciary duty.

Heck photo

Representative Joe Heck (R-NV3) is the second.  Congressman Heck decided that investment advisers should be allowed to put their own interests ahead of the interests of their retirement account clients.  Perhaps he’s touting the GOP line that making the investment advisers put clients’ interests ahead of their own profits would mean higher costs for investment advice.   The GOP says they want to “protect access to affordable retirement advice.”  If you are inclined to believe this I have some investment advice for you….free of charge.

Hardy 2

And, the third one who doesn’t get to talk about protecting retirees? Nevada 4th District Mr. Malaprop, Cresent Leo Hardy, Republican from Mesquite.   He seems to like the “old standard,” and this raises the question why?  Let’s take a look at the “old standard:”

“Before the new standard, advisers were only required to give “suitable” advice, which left the door open for them to steer clients into products that made the advisers more money but weren’t the best option. That practice was costing Americans an estimated $17 billion a year in conflicted advice, according to the White House. Some people say their finances, particularly their chances of retiring comfortably, have been destroyed by bad advice and that they would have simply been better off without it.” [TP]

Yes, we have it, Representative Hardy evidently believes that it is better for Americans to waste $17 billion per year on conflicted investment advice than to hold advisers to a higher standard of fiduciary responsibility.

Titus

One, that would be ONE member of the Nevada congressional delegation voted to hold financial advisers to a higher standard than “just what will best line the pockets of their firms.”  Representative Dina Titus (D-NV1) was the lone member among the delegation to vote against the GOP sell out to the financial and banking industry.

Thus, the next time one of the three Republicans blather on about how they want to protect senior citizens and retirees – We can smile and say “But what about HJ Res 88 on April 28, 2016 at 3:23 pm.”

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Filed under Amodei, financial regulation, Heck, Nevada Congressional Representatives, Nevada politics, profiteering, public employees, Titus

The Famous Final Scene: Financialism and The People

Bankers and their conservative apologists don’t seem to understand why The People Don’t Love Them Anymore?  Some of the resulting punditry has the ring of the Famous Final Scene — “Does this mean we’re really breaking up?”  Could be, and if so there are some elements which explain the situation.

“You don’t listen to me any more.”  Mortgage foreclosure activity is rising again after a brief hiatus, and Nevada continues to lead the nation in this unfortunate category.  “Nevada had the country’s highest foreclosure rate last quarter, with one in every 44 homes with a foreclosure filing. While foreclosures in Nevada decreased from the second quarter, default notices jumped more than 15 percent.”  [Reuters]

No, the over-heated Housing Bubble and subsequent financial collapse wasn’t the result of those irresponsible ‘little people’ who took on more mortgage than they could afford.  Blaming the victims, who fell for the mortgage bankers’ siren songs, who believed the mortgage bankers when they were told they qualified for a mortgage, and were often horrified to discover esoteric terms that caused their mortgage payments to skyrocket, isn’t the explanation.

No, blaming the mortgage twins, Fannie Mae and Freddie Mac, isn’t the answer either.  Fannie Mae was privatized in 1968, complete with shareholders and profit/loss statements.  Freddie Mac went public in 1989.  Not that these two institutions covered themselves in glory — by January 2007, “According to a report by the Office of Federal Housing Enterprise Oversight (OFHEO), at the end of 2007 Fannie Mae and Freddie Mac own $267 billion in mortgage-backed securities issued by other firms.” [SPL]

On September 7, 2008 Fannie Mae and Freddie Mac are placed in a conservatorship, “to be managed by the Federal Housing Finance Agency. The estimated cost of the rescue is unknown, but analysts say it potentially could put taxpayers at risk of paying billions of dollars if the state of the U.S. housing market fails to improve. The CEOs of both companies, Daniel Mudd of Fannie Mae and Freddie Mac’s Richard Styon, are relieved of their jobs and expected to receive a combined executive payout package of between $10 million to $19 million.” [SPL]

The “government made me do it” argument doesn’t wash because the Mortgage Twins were behaving — not like a government entity exercising responsible oversight — but more like their non-GSE cousins in the private sector, anxious to get further into the highly profitable securitization game.

Well then, the Community Reinvestment Act requirements “must” have caused the banks to make too many subprime loans?  No.  The facts are otherwise: “50% of subprime loans were made by mortgage service companies not subject [to] comprehensive federal supervision and another 30% were made by affiliates of banks or thrifts which are not subject to routine supervision or examinations.”  [BusinessWeek] And, “Not surprisingly given the higher degree of supervision, loans made under the CRA program were made in a more responsible way than other subprime loans. CRA loans carried lower rates than other subprime loans and were less likely to end up securitized into the mortgage-backed securities that have caused so many losses, according to a recent study by the law firm Traiger & Hinckley.”  [BusinessWeek]

Perhaps now the average American victim of the credit meltdown, whose tax dollars were used to guarantee the solvency of the American bankers, are tired of being scapegoats?  Members of the financial sector, whose avarice engendered the over-heated housing bubble, cry “Irresponsible Borrowers, Mortgage Twins, Community Reinvestment Act” in a manner analogous to the practice of putting one’s fingers in one’s ears and repeating “La, La, La, La I Can’t Hear You.”  {stage directions: “door slams, sound of car leaving driveway}

“Mother said you were shiftless.”  There’s nothing a disreputable person loves more than to remain unsupervised.   Likewise, there is nothing an ethically challenged group loves more than deregulation.   Why else would banks revise their charters to place themselves under the eyes of those government agencies most willing to look the other way?  [DB] [NRP] [TBS] And yet the banking corporations and their supporters continue to prescribe deregulation as the way to protect American taxpayers, account holders, and consumers.

Before Congressional investigators the Wall Street barons proclaimed their patriotism and devotion to American “ethics and values,” back in their corporate offices they reinforced the notion that any “market” was ethical as long as there were two willing partners to the transaction — even if one was being sold a pig in a poke — even if the investment bank was betting against its own deal. [Bloomberg] [NYT]   Brooksley Born, former head of the CFTC tried to warn us about the deregulation of credit default swaps before most people had even heard the term, she was rewarded for her prescience by being replaced, and later labeled a Cassandra. [WaPo] [PBS] {stage directions:  two adversaries sit in tense silence across the room…}

“How can you keep running up these bills?”  Corollary to ” You promised you’d stop…”  If we were thinking that the popularity of credit default swaps might have declined in the wake of the housing bubble collapse, consider their use as European economies struggle.  [Bloomberg] As for the infamous CDO’s — some settlements have been agreed upon, but Morgan Stanley was exonerated from charges of defrauding a government pension fund (Libertas Case) because the offerers, not Morgan Stanley, prepared the statements. [Reuters] {stage directions: A throws pile of paperwork at B}

“You expect everyone else to clean up your messes.”  One such mess is “financialism.”

“Over the last 25 years American capitalism has become financialism, which is primarily transactional, unrestrained greed. Financialism embraces the view that the only purpose of business is to create shareholder value, measured primarily by short-term results. The dominance of short-termism is evidenced by the magnitude of institutional stock “renting” for terms of 12 months or less, the volume of high-speed, high-frequency algorithmic short-term trading, the short average tenures of chief executive officers and the dominance of executive compensation tied solely to short-term results.”  [Forbes]

And, this is a truly large mess, something Adam Smith never contemplated.  Financialism distorts capitalism and creates middle class income stagnation, income disparity, off shoring jobs, diminished manufacturing capability, and equity market volatility.   It is the financial equivalent of being “excused” for leaving dirty clothing, empty pizza boxes, half-empty pop cans, and dirty tableware scattered about because “I’m busy.”  It is to trade short term profitability for long term stability.   If it’s messy, so be it, the “taxpayers” will clean up after us.   {stage directions: clothing, pizza boxes, pop cans hurled against wall to make a pile on the floor}

I’m keeping the house…  little wonder people from all walks of life have decided to “occupy” the symbol of the selectively deaf, irresponsible, intractable, and self centered Financialist Universe, Wall Street.  The old excuses (the government made me do it), the tired call for even less supervision, the interminable trading for the sake of making trades,  and the unwillingness to even consider cleaning up the resulting messes, have pushed Americans about as far as conceivable into an adversarial relationship with what should have been one of their essential financial utilities.  Is it surprising those people are beginning to speak of d-i-v-o-r-c-e?

More reading and recommendations:

On financialism and its effects – “The Business Revolution that’s destroying the American Dream,” Hess, Forbes, 2/24/11.  “Occupy Wall Street: Some Thoughts on an Agenda,” Armistead, Seeking Alpha, 10/17/11.  “Jungle Ethics Financialism vs. Free Market Capitalism, Seeking Alpha, 6/8/09.

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Filed under Economy, financial regulation, Foreclosures, Nevada economy, privatization, profiteering

>All Our Sons

>
Arthur Miller’s “All My Sons” opened on Broadway at the Coronet Theater in New York on January 29, 1947. Directed by controversial director Elia Kazan, it won the ’47 Tony and the New York Drama Critics Circle Award. Hollywood snapped up the rights and cast Edward G. Robinson, Burt Lancaster, and Mady Christians in starring roles. [source] No play, no movie, is going to garner awards merely because of an outstanding director and a star studded cast; there has to be a message with which the audience can connect. “All My Sons” connected in no small part because of the kernel of truth inside the dramatic presentation.

Miller’s then mother-in-law showed the playwright an Ohio newspaper story about a woman who informed on her father for selling faulty parts to the U.S. military during World War II. The characters Miller wrapped around this plot could as easily exemplify some of the modern profiteers, and those who enable them.

There’s the unscrupulous businessman “Joe Keller” who escaped charges initially, spends three years trying to shift the blame to his partner, and when the truth emerges tries to rationalize his behavior by claiming “he did it for his family.” Does Joe bear any resemblance to those who attended the Fairfax County VA Chamber of Commerce seminar on “Congressional Investigations: The Challenge of Responding Effectively?” [WaPo] Does the spokesman for Dyncorp, Inc. really need a brush up session on “How they (Congressional investigators) think? How do they view the process?”

Kate Keller” lives in denial. She denies that her son may be dead, she denies that her husband is profiteering. Is there sufficient denial going on that corporate representatives really needed to hear from a panel of lawyers, Congressional investigators, and an ABC news reporter about how to respond to Congressional oversight? [WaPo]

Chris Keller” returns from combat angry that the world is continuing as if nothing has happened and thwarted by his mother’s denials. Hasn’t Paul Riechkoff of the Iraq Afghanistan Veterans of America been trying to tell us that returning veterans have some difficulty adjusting to “normal” at home when no one understands the essential nature of their experiences?

Ann Deever,” Chris’s girlfriend, carries the burden of guilty knowledge throughout the play; knowledge of Joe’s deceit and culpability, and knowledge that the longed for son, Larry, committed suicide upon hearing of his father’s racket. Do the corporate consciences need to be spurred by a “significant spike in breadth, depth and scope of investigations.” [WaPo] Why would corporate spokespersons sign up for a Chamber of Commerce program in which the Republican general counsel for the House Oversight and Government Reform Committee advised that if a contract looks too good to be true — it probably is — advice generally offered by centuries of parents and grandparents. Or, why would they need to be reminded by a deputy chief investigative counsel, “Don’t promise you’re going to cooperate if you’re not going to deliver.” Or, as a cynic might question: When they signed up for the seminar were they looking for a way to put the “blame on their partners?”

Perhaps this drama is a candidate for a revival?

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Filed under Iraq, oversight, profiteering